CHAPTER 154. CIGARETTE TAX

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TAX CODE

TITLE 2. STATE TAXATION

SUBTITLE E. SALES, EXCISE, AND USE TAXES

CHAPTER 154. CIGARETTE TAX

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 154.001. DEFINITIONS. In this chapter:

(1) "Bonded agent" means a person in this state who is an agent

of a person outside this state and receives cigarettes in

interstate commerce and stores the cigarettes for distribution or

delivery to distributors under orders from the person outside

this state.

(2) "Cigarette" means a roll for smoking:

(A) that is made of tobacco or tobacco mixed with another

ingredient and wrapped or covered with a material other than

tobacco; and

(B) that is not a cigar.

(3) "Commercial business location" means the entire premises

occupied by a permit applicant or a person required to hold a

permit under this chapter.

(4) "Common carrier" means a motor carrier registered under

Chapter 643, Transportation Code, or a motor carrier operating

under a certificate issued by the Interstate Commerce Commission

or a successor agency to the Interstate Commerce Commission.

(5) "Consumer" means a person who possesses cigarettes for

personal consumption.

(6) "Counterfeit stamp" means a sticker, label, print, tag, or

token that is used or is intended to be used to simulate a stamp

and that is not authorized or issued by the comptroller.

(7) "Distributor" means a person who:

(A) is authorized to purchase for the purpose of making a first

sale in this state cigarettes in unstamped packages from

manufacturers who distribute cigarettes in this state and to

stamp cigarette packages;

(B) ships, transports, imports into this state, acquires, or

possesses cigarettes and makes a first sale of the cigarettes in

this state;

(D) is an importer or import broker.

(8) "Export warehouse" means a person in this state who receives

cigarettes in unstamped packages from manufacturers and stores

the cigarettes for the purpose of making sales to authorized

persons for resale, use, or consumption outside the United

States.

(9) "First sale" means, except as otherwise provided by this

chapter:

(A) the first transfer of possession in connection with a

purchase, sale, or any exchange for value of cigarettes in

intrastate commerce;

(B) the first use or consumption of cigarettes in this state; or

negligence, theft, or other unaccountable loss.

(10) "Importer" or "import broker" means a person who ships,

transports, or imports into this state cigarettes manufactured or

produced outside the United States for the purpose of making a

first sale in this state.

(11) "Individual package of cigarettes" means a package that

contains not fewer than 10 cigarettes.

(12) "Manufacturer" means a person who manufactures and sells

cigarettes to a distributor.

(13) "Manufacturer's representative" means a person employed by

a manufacturer to sell or distribute the manufacturer's stamped

cigarette packages.

(14) "Permit holder" means a bonded agent, distributor,

wholesaler, manufacturer, importer, or retailer required to

obtain a permit under Section 154.101.

(15) "Place of business" means:

(A) a commercial business location where cigarettes are sold;

(B) a commercial business location where cigarettes are kept for

sale or consumption or otherwise stored; or

(16) "Previously used stamp" means a stamp that has been used to

show payment of a tax imposed by this chapter and is again used,

sold, or possessed for sale or use to show payment of a tax

imposed by this chapter.

(17) "Retailer" means a person who engages in the practice of

selling cigarettes to consumers and includes the owner of a

coin-operated cigarette vending machine.

(18) "Stamp" includes only a stamp that:

(A) is printed, manufactured, or made by authority of the

comptroller;

(B) shows payment of the tax imposed by this chapter; and

Texas tax stamp.

(19) "Wholesaler" means a person, including a manufacturer's

representative, who sells or distributes cigarettes in this state

for resale but who is not a distributor.

Acts 1981, 67th Leg., p. 1638, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 1, eff. March

1, 1986; Acts 1989, 71st Leg., ch. 240, Sec. 1, eff. Oct. 1,

1989; Acts 1991, 72nd Leg., ch. 409, Sec. 1, eff. June 7, 1991;

Acts 1995, 74th Leg., ch. 705, Sec. 10, eff. Sept. 1, 1995; Acts

1997, 75th Leg., ch. 165, Sec. 30.262, eff. Sept. 1, 1997; Acts

1997, 75th Leg., ch. 1040, Sec. 40, eff. Sept. 1, 1997; Acts

1997, 75th Leg., ch. 1423, Sec. 19.15, eff. Sept. 1, 1997; Acts

2001, 77th Leg., ch. 540, Sec. 1, eff. Sept. 1, 2001; Acts 2001,

77th Leg., ch. 1263, Sec. 46, eff. Oct. 1, 2001.

Sec. 154.002. STORAGE. The commercial business location where

cigarettes are stored or kept cannot be a residence or a unit in

a public storage facility.

Added by Acts 2001, 77th Leg., ch. 540, Sec. 2, eff. Sept. 1,

2001.

SUBCHAPTER B. IMPOSITION AND RATE OF TAX

Sec. 154.021. IMPOSITION AND RATE OF TAX. (a) A tax is imposed

on a person who uses or disposes of cigarettes in this state.

(b) The tax rates are:

(1) $70.50 per thousand on cigarettes weighing three pounds or

less per thousand; and

(2) the rate provided by Subdivision (1) plus $2.10 per thousand

on cigarettes weighing more than three pounds per thousand.

Acts 1981, 67th Leg., p. 1640, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1984, 68th Leg., 2nd C.S., ch. 31, art. 2,

Sec. 1, eff. Aug. 1, 1984, Sec. 2, eff. Sept. 1, 1985; Acts 1987,

70th Leg., 2nd C.S., ch. 5, art. 4, Sec. 1; Acts 1990, 71st Leg.,

6th C.S., ch. 5, Sec. 2.01, eff. July 1, 1990.

Amended by:

Acts 2006, 79th Leg., 3rd C.S., Ch.

7, Sec. 1, eff. January 1, 2007.

Sec. 154.022. TAX IMPOSED ON FIRST SALE OF CIGARETTES. The

cigarette tax is imposed and becomes due and payable when a

person in this state receives cigarettes to make a first sale.

Acts 1981, 67th Leg., p. 1640, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1991, 72nd Leg., ch. 409, Sec. 2, eff. June

7, 1991.

Sec. 154.023. IMPACT OF TAX. The ultimate consumer or user in

this state bears the impact of the tax imposed by this chapter.

If another person pays the tax, the amount of the tax is added to

the price to the ultimate consumer or user.

Acts 1981, 67th Leg., p. 1640, ch. 389, Sec. 1, eff. Jan. 1,

1982.

Sec. 154.024. IMPORTATION OF SMALL QUANTITIES. (a) A person

who imports and personally transports 200 or fewer cigarettes

into this state from another state is not required to pay the tax

imposed by this chapter if the person uses the cigarettes and

does not sell them or offer them for sale. A person who imports

and personally transports 200 or fewer cigarettes into this state

from a foreign country shall pay the tax imposed by this chapter

and have affixed on each individual package of cigarettes a stamp

to show payment of the tax.

(b) Employees of the Texas Alcoholic Beverage Commission who

collect taxes on alcoholic beverages at ports of entry shall

collect at the ports of entry the tax imposed by this chapter on

cigarettes imported into this state. In computing the amount of

taxes to be collected, the commission may round the total amount

up to the nearest quarter of a dollar.

shall make rules for the administration of this section.

Acts 1981, 67th Leg., p. 1640, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 2, eff. Oct.

1, 1989; Acts 1997, 75th Leg., ch. 1423, Sec. 19.16, eff. Sept.

1, 1997; Acts 1999, 76th Leg., ch. 1110, Sec. 1, eff. Sept. 1,

1999.

Amended by:

Acts 2005, 79th Leg., Ch.

792, Sec. 2, eff. September 1, 2005.

Sec. 154.025. LIEN TO SECURE PAYMENT OF TAX. (a) In this

section, "collecting agent" means a person who pays or who is

liable for payment of the tax imposed under Section 154.022 and

who is not the consumer of the cigarettes on which the tax is

imposed.

(b) A collecting agent is an agent of the state for the purpose

of collecting the cigarette tax for the state.

(1) cigarettes on which the collecting agent has paid or is

liable for the payment of the tax imposed under Section 154.022;

and

(2) the proceeds from the sale of the cigarettes.

(d) The lien under this section attaches to all cigarettes

purchased from a collecting agent and all proceeds from the sale

of the cigarettes on the date that the cigarettes are sold by the

collecting agent. An action by the collecting agent or any other

person is not required to perfect the lien.

(e) The lien under this section takes priority over any other

lien on the cigarettes purchased from a collecting agent and the

proceeds from the sale of the cigarettes, except the preferred

state tax lien under Section 154.413.

(f) A collecting agent may enforce a lien under this section

through any legal proceeding, including a proceeding under Title

11, U.S.C., and assertion of an administrative priority claim to

the extent that the lien does not adequately protect the

collecting agent.

(g) A prior demand is not required to commence an action to

enforce a lien under this section.

(h) In an action to enforce a lien under this section, a court

may prevent the resale of any cigarettes on which a collecting

agent has the lien by any appropriate order, including the

seizure of the cigarettes by an appropriate legal officer through

attachment, sequestration, or other procedure. It is not a

defense to the granting of injunctive relief by the court that

remedies at law, including a suit for damages, are available.

(i) A court shall distribute money received from the foreclosure

of a lien under this section in the following order:

(1) payment of all costs and expenses, including attorney fees,

incurred by a collecting agent to enforce the lien;

(2) payment of taxes on the cigarettes purchased from the

collecting agent and subject to the lien, including not only the

taxes on the cigarettes and proceeds subject to the foreclosure

but also the taxes on all cigarettes for which the collecting

agent has not received payment in accordance with the terms of

the agreement between the collecting agent and the person to whom

the collecting agent sold the cigarettes; and

(3) any remaining money to the person against whom the lien

operates.

(j) A lien under this section may not be waived if the tax

payment that is secured by the lien has not been paid to the

collecting agent. A purported waiver of the tax payment is void.

(k) To the extent allowed by law, the priority claim of the

comptroller under 11 U.S.C. Section 507(d) for taxes imposed by

Section 154.022 is assigned to the collecting agent.

Added by Acts 1991, 72nd Leg., ch. 409, Sec. 3, eff. June 7,

1991. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.17, eff.

Sept. 1, 1997.

SUBCHAPTER C. TAX STAMPS

Sec. 154.041. STAMP REQUIRED. (a) A person who pays a tax

imposed by this chapter shall securely affix a stamp to each

individual package of cigarettes to show payment of the tax.

(b) Except as provided by Section 154.152, each distributor

shall obtain the necessary stamps before receiving or accepting

delivery of unstamped packages of cigarettes. The possession of

unstamped packages of cigarettes without the possession of the

requisite amount or number of stamps is prima facie evidence that

the cigarettes are possessed for the purpose of making a first

sale without stamps and without payment of the tax imposed by

this chapter.

cigarettes is notice that the tax has not been paid.

(d) A manufacturer of cigarettes outside this state may purchase

a stamp and affix it to the individual package and no further

payment of the tax is required.

(e) The transfer of possession of cigarettes by a bonded agent

to a distributor in this state, under instructions received from

outside this state, is not a first sale.

Acts 1981, 67th Leg., p. 1640, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1983, 68th Leg., p. 788, ch. 188, Sec. 1,

eff. May 21, 1983; Acts 1991, 72nd Leg., ch. 409, Sec. 4, eff.

June 7, 1991.

Sec. 154.0415. CIGARETTES TO WHICH STAMPS MAY NOT BE AFFIXED. A

person may not affix a stamp to a package of cigarettes if the

package:

(1) does not comply with the Cigarette Labeling and Advertising

Act (15 U.S.C. Section 1331 et seq.) for the placement of labels,

warnings, or any other information for a package of cigarettes to

be sold within the United States;

(2) is labeled "For Export Only," "U.S. Tax Exempt," "For Use

Outside U.S.," or other wording indicating that the manufacturer

did not intend that the product be sold in the United States;

(3) has been altered by adding or deleting wording, labels, or

warnings described in Subdivision (1) or (2);

(4) has been imported into the United States in violation of 26

U.S.C. Section 5754;

(5) in any way violates federal trademark or copyright laws; or

(6) contains cigarettes with respect to which any person is not

in compliance with 15 U.S.C. Section 1335a, as amended, relating

to submission of ingredient information to federal authorities,

19 U.S.C. Sections 1681-1681b, as amended, relating to imports of

certain cigarettes, 26 U.S.C. Section 5754, as amended, or

relating to previously exported tobacco products.

Added by Acts 1999, 76th Leg., ch. 1539, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 1104, Sec. 1, eff.

Sept. 1, 2001.

Sec. 154.042. DISTRIBUTOR. (a) A distributor shall affix the

required tax stamps to each individual package that is to be

sold, offered for sale, consumed, distributed, handled, or

transported.

(b) Except as provided by Subsection (c), each distributor in

this state shall affix the required stamps within 96 hours after

receiving the cigarettes, excluding Saturdays, Sundays, and legal

holidays.

will receive cigarettes in quantities that will make compliance

with Subsection (b) commercially impracticable in the normal

course of business, the distributor shall provide the

comptroller, before receipt of the cigarettes, with advance

written notice of the anticipated noncompliance and a plan for

achieving compliance. On receipt of the written notice, the

comptroller shall review the plan and determine whether to

provide an extension of time in which the tax stamps must be

affixed after the distributor receives the cigarettes. The

comptroller may not unreasonably withhold an extension of time.

(d) A plan for achieving compliance that is submitted to the

comptroller under Subsection (c) is confidential and not subject

to Chapter 552, Government Code.

Acts 1981, 67th Leg., p. 1641, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1991, 72nd Leg., ch. 409, Sec. 5, eff. June

7, 1991; Acts 1995, 74th Leg., ch. 76, Sec. 5.95(88), eff. Sept.

1, 1995; Acts 1995, 74th Leg., ch. 1000, Sec. 37, eff. Oct. 1,

1995; Acts 1997, 75th Leg., ch. 1423, Sec. 19.18, eff. Sept. 1,

1997.

Sec. 154.043. SALE OF STAMPS. Except as provided in Section

154.044 of this code, only the comptroller may sell cigarette

stamps. The stamps may be sold only in quantities made available

by the comptroller. The purchaser shall place the order for

stamps directly with the comptroller.

Acts 1981, 67th Leg., p. 1641, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 89, Sec. 1, eff. Aug.

26, 1985; Acts 1997, 75th Leg., ch. 1423, Sec. 19.19, eff. Sept.

1, 1997.

Sec. 154.044. PURCHASE FROM A DISTRIBUTOR. (a) If a

distributor does not possess sufficient unused stamps to cover

the distributor's inventory of unstamped cigarettes, the

comptroller may allow the distributor to purchase the required

stamps from any distributor through a requisition from the

comptroller so that the unstamped cigarettes may be stamped

immediately under the direction of the comptroller.

(b) The comptroller may issue the requisition. The requisition

shall be in triplicate on a form prescribed by the comptroller.

The copies shall be designated "original," "duplicate," and

"triplicate." The comptroller shall keep the original and send

the duplicate to the purchaser and the triplicate to the seller.

The purchaser and seller shall keep their respective copies

available at all times for four years for inspection by the

comptroller and the attorney general.

Acts 1981, 67th Leg., p. 1641, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 3, eff. Oct.

1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 6, eff. June 7,

1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.20, eff. Sept. 1,

1997.

Sec. 154.045. RECALL BY COMPTROLLER. (a) The comptroller may

recall unused stamps.

(b) If the comptroller recalls stamps, the purchaser, on the

comptroller's demand, shall surrender the stamps to the

comptroller for exchange.

purchaser, the comptroller shall issue stamps with different

serial numbers for the recalled stamps.

Acts 1981, 67th Leg., p. 1641, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 4, eff. Oct.

1, 1989; Acts 1997, 75th Leg., ch. 1423, Sec. 19.21, eff. Sept.

1, 1997.

Sec. 154.046. INVOICE FOR STAMPS. (a) The comptroller shall

send an original invoice along with any stamps shipped to a

distributor.

(b) The invoice shall be issued in duplicate and numbered

consecutively. The invoice must show:

(1) the date of sale;

(2) the name and address of the distributor;

(3) the number of stamps;

(4) the serial numbers of the stamps; and

(5) the denomination and value of the stamps.

all times for four years for inspection by the comptroller and

the attorney general.

Acts 1981, 67th Leg., p. 1641, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 5, eff. Oct.

1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 7, eff. June 7,

1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.22, eff. Sept. 1,

1997.

Sec. 154.047. STAMPS SHIPPED WITH DRAFT ATTACHED. (a) A

distributor may order stamps to be shipped to a bank with which

the distributor regularly transacts business if the bank is a

designated state depository under Section 404.022, Government

Code. The comptroller may ship the stamps to the bank with the

invoice required by Section 154.046 and a form draft.

(b) The comptroller shall prescribe the form of the draft. The

draft must show:

(1) the amount of the draft;

(2) the name of the distributor;

(3) the name and address of the bank; and

(4) the date of shipment.

the draft, the bank shall return the draft and stamps to the

comptroller. The comptroller shall notify the distributor to

appear before the comptroller to show cause why the distributor

should not be denied the privilege of ordering stamps shipped

with draft attached. If the distributor fails to show good cause,

the comptroller may stop shipping stamps with draft attached.

Acts 1981, 67th Leg., p. 1642, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 89, Sec. 2, eff. Aug.

26, 1985; Acts 1991, 72nd Leg., ch. 409, Sec. 8, eff. June 7,

1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.23, eff. Sept. 1,

1997.

Sec. 154.050. PAYMENT. (a) The comptroller shall require that

payment in full for stamps be made within 30 days after the date

stamps and an accompanying invoice from the comptroller are

received by the distributor, except that at the close of each

biennium, payment for stamps purchased or received on or before

August 31 of that fiscal year shall be made in full on or before

August 31 of that fiscal year, providing that such payment be

received in the office of the comptroller no later than August 31

of that fiscal year notwithstanding any other statute regarding

tax due dates to the contrary.

(b) The comptroller may not ship stamps without advance payment

under this section unless the distributor has satisfied all

requirements imposed under Section 154.051.

to the comptroller, electronic funds transfer to the comptroller,

or any other method of payment authorized by the comptroller.

(d) The dishonor of a check delivered to the comptroller for

payment of stamps constitutes a failure to pay the tax when due.

Acts 1981, 67th Leg., p. 1642, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1981, 67th Leg., p. 2779, ch. 752, Sec. 12,

eff. Jan. 1, 1982; Acts 1987, 70th Leg., ch. 580, Sec. 1, eff.

Sept. 1, 1987; Acts 1989, 71st Leg., ch. 240, Sec. 7, eff. Oct.

1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 10, eff. June 7,

1991; Acts 1997, 75th Leg., ch. 1040, Sec. 42, eff. Sept. 1,

1997; Acts 1997, 75th Leg., ch. 1423, Sec. 19.26, eff. Sept. 1,

1997.

Sec. 154.051. CIGARETTE TAX RECOVERY TRUST FUND. (a) The

cigarette tax recovery trust fund is a private trust fund

established outside the state treasury and as provided by this

section secures the payment of cigarette taxes by distributors

who contribute to the fund. The fund is composed of the total

amount in the separate accounts maintained in trust for all

contributing distributors as provided by this section. The assets

of the fund, including interest earned by those assets, are to be

held in trust for the benefit and protection of the state

treasury, and may not be diverted, distributed, or appropriated

for any purpose other than as provided by this section. Interest

earned by a distributor's account but not yet refunded to the

distributor pursuant to Subsection (d) shall, on a monthly basis,

be paid to the comptroller as provided by Subsection (b) or

credited to the distributor's account.

(b) The comptroller is the trustee of the fund as provided by

Section 404.073, Government Code, and shall manage the fund as

provided by this section. In investing the assets of the fund,

the comptroller has the obligations, duties, and powers provided

for the investment of state funds by Sections 404.021 through

404.0245, Government Code. The comptroller shall receive five

percent of the interest earned on all assets of the fund as

compensation for serving as trustee of the fund.

this chapter without advance payment shall contribute to an

account maintained in the distributor's name in the fund money in

the amount of each allowance to which the distributor is entitled

under Section 154.052. When the money in the distributor's

account equals 20 percent of the designated amount of stamps

requested by the distributor and approved by the comptroller to

be purchased in any one month, the distributor's interest in the

fund becomes vested.

(d) Except as provided by Subsection (g) of this section, on the

last day of each quarter after the quarter in which a

distributor's interest in the fund becomes vested, the

comptroller shall refund to the distributor all money contributed

to the fund by the distributor under Subsection (c) of this

section in the earliest preceding quarter for which a refund has

not been paid, plus interest earned on that amount, as long as

the distributor's interest in the fund remains vested.

(e) Until a distributor who orders stamps without advance

payment acquires a vested interest in the fund, the comptroller

may require the distributor to post with the comptroller an

irrevocable letter of credit drawn in the form and amount

specified by the comptroller to secure the payment of cigarette

taxes by that distributor. The comptroller may not ship stamps to

a distributor not having a vested interest in the fund without

advance payment until the distributor posts the required letter

of credit.

(f) In addition to any other requirement under this section, the

comptroller as a condition for shipping stamps without advance

payment may:

(1) require a fiscal-year-end financial statement, including a

balance sheet and income statement verifiable as to its accuracy

or other financial information acceptable to the comptroller and

verifiable as to its accuracy;

(2) require indemnification from each officer, director, and

stockholder owning 10 percent or more of outstanding stock, if

the distributor is a corporation, from each partner, if the

distributor is a partnership, from each member or owner of a

joint venture or syndication, and from the owner of a sole

proprietorship;

(3) require the distributor to obtain and provide the

comptroller with a credit report from a credit reporting agency

acceptable to the comptroller;

(4) require a distributor to increase the balance in its account

in the fund;

(5) require a distributor to post a letter of credit;

(6) reduce a distributor's credit time or amount; or

(7) take any other reasonable and necessary action to protect

the state treasury from loss due to the nonpayment of cigarette

taxes.

(g) If a distributor who has an account in the fund fails to pay

in full a tax imposed by this chapter by the due date, the

comptroller, without prior notice to the distributor or any other

preliminary procedure, may seize any unaffixed stamps and any

stamped cigarette packages, up to and including the full amount

of unpaid tax. If the proceeds from the seizure do not satisfy

the total tax deficiency or the comptroller does not seize any

unaffixed stamps or stamped cigarette packages, the comptroller

may withdraw immediately from the fund an amount equal to the

amount of unpaid taxes due. The comptroller shall first withdraw

the amount from the account of the defaulting distributor. The

comptroller shall use the comptroller's best efforts to collect

the tax due from the defaulting distributor before withdrawing

money from the other accounts in the fund to satisfy the tax

liability. If that distributor's account does not contain

sufficient money to satisfy the tax liability in full, the

comptroller shall withdraw the additional amount necessary to

satisfy that liability from the other accounts in the fund in

proportion to the balance of each account, except that the

withdrawal from any other distributor's account in the fund is

limited to an amount not greater than 50 percent of the

designated amount of stamps requested by the distributor under

Subsection (c) or of the amount required by the comptroller under

Subsection (f)(4). Not later than the fifth day after the date of

a withdrawal, the comptroller shall notify each distributor of

the withdrawal from its account and the amount withdrawn. If as a

result of a withdrawal made under this subsection a distributor's

balance in its account is reduced to an amount less than the

minimum required under this section, the distributor's interest

in the fund is no longer vested, and the comptroller may

discontinue refunds to the distributor under Subsection (d) until

the distributor again acquires a vested interest in the fund. The

comptroller may require a distributor whose interest in the fund

is no longer vested to post an irrevocable letter of credit with

the comptroller to secure the payment of cigarette taxes by the

distributor. To protect the fund, each distributor having an

account in the fund must indemnify the fund against any amount

withdrawn from the fund under this subsection because of the

failure of the distributor to pay in full a tax imposed by this

chapter by the due date.

(h) If distributor accounts, other than a defaulting distributor

account, are drawn pursuant to Subsection (g), each affected,

nondefaulting distributor shall have a claim against the

defaulting distributor for the amount so drawn. The comptroller

is hereby appointed trustee, agent, and assignee of each

affected, nondefaulting distributor for purposes of seeking

recovery of the amount so drawn. The comptroller shall have the

sole judgment and discretion in deciding whether or not to pursue

such a claim and shall have discretion to handle any such claim

on any basis that in the opinion of the comptroller is in the

best interest of the fund. The comptroller is released from any

liability related to the handling of the claims described in this

section except for intentional or wilful misconduct.

(i) A distributor or person authorized to act on behalf of a

distributor may notify the comptroller in writing that the

distributor no longer desires to have stamps shipped or a meter

set without advance payment, and may request that the money in

the distributor's account in the fund be paid to the distributor

or the distributor's heirs or assigns. The comptroller shall pay

the money in the distributor's account as requested at the end of

the next quarter after all outstanding taxes owed to the state by

the distributor have been paid.

(j) Under no circumstances shall the comptroller return to any

distributor an amount greater than the balance in the

distributor's account within the cigarette tax recovery trust

fund less any sums drawn pursuant to Subsection (g). The State of

Texas' liability to any distributor pursuant to this section is

expressly limited to the sums on deposit in the distributor's

account at the time the request for return of funds is made.

(k) The comptroller may adopt and enforce rules necessary to

carry out this section.

(l) For purposes of this section, "quarter" refers to a quarter

of the state's fiscal year.

(m) Information provided under Subsection (f) is confidential

and not subject to Chapter 552, Government Code.

(n) The comptroller shall regularly distribute financial

information regarding the performance of the fund to

participating distributors on a regular basis. On the written

request of a participating distributor, the comptroller shall

provide the distributor with the name and address of each

distributor participating in the fund, the percentage of the

total fund represented by each distributor's account, and the

total amount of money in the fund.

(o) In lieu of participation in the cigarette tax recovery trust

fund to secure payment for stamps and in lieu of advance payment

for stamps, a distributor may pledge to the comptroller

sufficient collateral to secure payment for stamps. Such pledge

shall be evidenced by a pledge agreement in a form promulgated by

the comptroller, and such collateral shall consist of

certificates of deposit, treasury notes, treasury bills, or other

similar types of collateral acceptable to the comptroller and

held in a separate trust fund established in the Texas Treasury

Safekeeping Trust Company. All interest earned on such collateral

shall belong to the distributor. The comptroller may require the

pledge of additional collateral in the event the comptroller

determines that the fair market value of the pledged collateral

is less than the amount due the comptroller for stamps. On the

written request of the distributor, the comptroller shall release

collateral from the pledge agreement or allow the substitution of

collateral subject to the pledge agreement if after such release

or substitution the fair market value of the collateral subject

to the pledge will be equal to or greater than the amount due the

comptroller for stamps. If a distributor fails to pay tax in full

when due, the comptroller may, if the distributor does not pay

such past due tax and any penalty related thereto within three

days after receipt of written notice of such failure from the

comptroller, sell or dispose of the collateral and apply the

proceeds to the payment of taxes, interest, penalties, and costs

due to the comptroller by the distributor, with any remaining

proceeds being refunded to the distributor.

Acts 1981, 67th Leg., p. 1643, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 89, Sec. 3, eff. Aug.

26, 1985; Acts 1987, 70th Leg., ch. 580, Sec. 2, eff. Sept. 1,

1987; Acts 1991, 72nd Leg., ch. 409, Sec. 11, eff. June 7, 1991;

Acts 1995, 74th Leg., ch. 76, Sec. 5.95(88), eff. Sept. 1, 1995;

Acts 1995, 74th Leg., ch. 1000, Sec. 38, eff. Oct. 1, 1995; Acts

1997, 75th Leg., ch. 891, Sec. 3.20, eff. Sept. 1, 1997; Acts

1997, 75th Leg., ch. 1040, Sec. 43, eff. Sept. 1, 1997; Acts

1997, 75th Leg., ch. 1423, Sec. 19.27, eff. Sept. 1, 1997.

Sec. 154.052. DISTRIBUTOR'S STAMPING ALLOWANCE. (a) A

distributor is, subject to the provisions of Section 154.051,

entitled to three percent of the face value of stamps purchased

as a stamping allowance for providing the service of affixing

stamps to cigarette packages, except that an out-of-state

distributor is entitled to receive only the same percentage of

stamping allowance as that given to Texas distributors doing

business in the state of the distributor.

(b) If a distributor violates a provision of this chapter, the

distributor is not entitled to receive a stamping allowance for

the period of the violation. On a determination by the

comptroller that the distributor is no longer in violation of a

provision of this chapter, the distributor is entitled to receive

a stamping allowance.

Acts 1981, 67th Leg., p. 1643, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1987, 70th Leg., ch. 580, Sec. 3, eff.

Sept. 1, 1987; Acts 1989, 71st Leg., ch. 240, Sec. 8, eff. Oct.

1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 12, eff. June 7,

1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.28, eff. Sept. 1,

1997.

Sec. 154.053. MANUFACTURE OF STAMPS. (a) The comptroller shall

design and have printed or manufactured cigarette tax stamps. If

the comptroller determines that it is necessary for the best

enforcement of this chapter, the comptroller may change the

design, color, or denomination of the stamps. The comptroller

shall determine the size, design, color, or denomination, and

quantity of stamps manufactured. The stamps shall be manufactured

so that they may be easily and securely attached to an individual

package of cigarettes. The comptroller may designate the method

of identification for the stamps and shall award the contract for

the printing or manufacturing to the person submitting the bid

that will give the best protection to the state in enforcing this

chapter.

(b) The comptroller shall designate the date of issue of new

stamps by issuing a proclamation. The date of the proclamation is

the date of issue.

that permits identification of the person that affixed the stamp

to the particular package of cigarettes by means of a number or

other mark on the stamp. The comptroller shall maintain for at

least four years the information identifying the person that

affixed the stamp to each package of cigarettes.

Acts 1981, 67th Leg., p. 1643, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 9, eff. Oct.

1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 13, eff. June 7,

1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.29, eff. Sept. 1,

1997; Acts 2001, 77th Leg., ch. 1104, Sec. 2, eff. Sept. 1, 2001.

Sec. 154.054. REDEMPTION AND DESTRUCTION OF STAMPS. (a) The

comptroller may redeem unused cigarette tax stamps that were

lawfully issued before a design, color, or denomination change.

(b) The comptroller may destroy stamps in the manner the

comptroller considers best.

Acts 1981, 67th Leg., p. 1643, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 10, eff.

Oct. 1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 14, eff. June

7, 1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.3, eff. Sept. 1,

1997.

Sec. 154.058. INVENTORY ON TAX INCREASE. (a) On the effective

date of a tax increase, each distributor, wholesaler, and

retailer who has 2,000 or more cigarettes in packages stamped

with stamps of an old design, color, or denomination shall

immediately inventory the packages and any unused stamps of an

old design, color, or denomination and file a report of the

inventory with the comptroller.

(b) Not later than the 30th day after the date of the increase,

each distributor, wholesaler, and retailer shall pay the amount

of the additional tax due because of the tax increase by

attaching to the inventory a cashier's check payable to the

comptroller, by electronic funds transfer to the comptroller or

by any other method of payment authorized by the comptroller.

of the inventory and must be able to document the method of

payment used.

(d) This section does not affect the date payment is due for

stamps of an old design, color, or denomination if payment has

not been made for the stamps on or before the effective date of

the tax increase.

Acts 1981, 67th Leg., p. 1644, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 2, eff. March

1, 1986; Acts 1989, 71st Leg., ch. 240, Sec. 12, eff. Oct. 1,

1989; Acts 1991, 72nd Leg., ch. 409, Sec. 15, eff. June 7, 1991;

Acts 1997, 75th Leg., ch. 1423, Sec. 19.31, eff. Sept. 1, 1997.

Sec. 154.060. CANCELLATION. No person may cancel, mark, or

mutilate a stamp on a package of cigarettes so that the

comptroller is prevented from or hindered in examining the

genuineness of the stamp.

Acts 1981, 67th Leg., p. 1644, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 13, eff.

Oct. 1, 1989; Acts 1997, 75th Leg., ch. 1423, Sec. 19.32, eff.

Sept. 1, 1997.

Sec. 154.061. PENALTY FOR FAILURE TO PAY TAX. (a) A

distributor who fails to timely pay the tax when due shall pay

five percent of the amount of tax then due as a penalty, and if

the distributor fails to pay the tax within 30 days after the day

on which the tax is due, the distributor shall pay an additional

five percent.

(b) The minimum penalty imposed by this section is $50.

payment of taxes constitutes a failure to pay the tax when due.

Added by Acts 1991, 72nd Leg., ch. 409, Sec. 16, eff. June 7,

1991.

SUBCHAPTER D. PERMITS

Sec. 154.101. PERMITS. (a) A person may not engage in business

as a distributor, wholesaler, bonded agent, manufacturer,

importer, or retailer unless the person has applied for and

received the applicable permit from the comptroller.

(b) Each distributor, wholesaler, bonded agent, manufacturer,

importer, or retailer shall obtain a permit for each place of

business owned or operated by the distributor, wholesaler, bonded

agent, manufacturer, importer, or retailer.

application for a permit and shall furnish the form on request of

an applicant.

(d) The applicant shall accurately complete all information

required by the application and provide the comptroller with such

additional information as the comptroller deems necessary.

(e) The comptroller may require each corporation, association,

joint venture, syndicate, partnership, or proprietorship to

furnish financial information regarding the applicant and to

provide the identity of each officer, director, stockholder

owning 10 percent or more of the outstanding stock, partner,

member, owner, or managing employee.

(f) Each distributor, wholesaler, and retailer that applies for

a permit to sell cigarettes from a vehicle must provide the make,

model, vehicle identification number, registration number, and

any other information required by the comptroller.

(g) All financial information provided under this section is

confidential and not subject to Chapter 552, Government Code.

(h) Permits for engaging in business as a distributor,

wholesaler, bonded agent, manufacturer, importer, or retailer

shall be governed exclusively by the provisions of this code.

Acts 1981, 67th Leg., p. 1645, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 3, eff. March

1, 1986; Acts 1989, 71st Leg., ch. 240, Sec. 14, eff. Oct. 1,

1989; Acts 1991, 72nd Leg., ch. 409, Sec. 17, eff. June 7, 1991;

Acts 1995, 74th Leg., ch. 76, Sec. 5.95(88), eff. Sept. 1, 1995;

Acts 1995, 74th Leg., ch. 1000, Sec. 39, eff. Oct. 1, 1995; Acts

1997, 75th Leg., ch. 1423, Sec. 19.33, eff. Sept. 1, 1997; Acts

2001, 77th Leg., ch. 1263, Sec. 47, eff. Oct. 1, 2001.

Sec. 154.1015. SALES; PERMIT HOLDERS AND NONPERMIT HOLDERS. (a)

Except for retail sales to consumers, cigarettes may only be

sold or distributed by and between permit holders.

(b) A person who is not a permit holder may not sell or

distribute more than 200 individual cigarettes to any person.

Added by Acts 1991, 72nd Leg., ch. 409, Sec. 18, eff. June 7,

1991.

Sec. 154.102. COMBINATION PERMIT. (a) The comptroller may

issue a combination permit for cigarettes and tobacco products to

a person who is a distributor, wholesaler, bonded agent,

manufacturer, importer, or retailer as defined by this chapter

and Chapter 155 for both cigarettes and tobacco products.

(b) A person who receives a combination permit pays only the

higher of the two permit fees.

Added by Acts 1991, 72nd Leg., ch. 409, Sec. 19, eff. June 7,

1991. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.34, eff.

Sept. 1, 1997; Acts 2001, 77th Leg., ch. 1263, Sec. 48, eff. Oct.

1, 2001.

Sec. 154.107. DENIAL OF PERMIT. The comptroller may reject an

application and deny a permit if the comptroller finds, after

notice and opportunity for hearing, any of the following:

(1) the premises where business will be conducted are not

adequate to protect the cigarettes or cigarette stamps; or

(2) the applicant or managing employee, or if the applicant is a

corporation, an officer, director, manager, or any stockholder

who holds directly or through family or partner relationship 10

percent or more of the corporation's stock, or, if the applicant

is a partnership, a partner or manager:

(A) has failed to disclose any information required by Sections

154.101(d), (e), and (f), including prior business experience,

financial condition of the permit holder, present or previous

business affiliations, prior employment, and any conviction of a

felony, or has made a false statement in the application; or

(B) has previously violated provisions of this chapter.

Acts 1981, 67th Leg., p. 1646, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1989, 71st Leg., ch. 240, Sec. 19, eff.

Oct. 1, 1989; Acts 1991, 72nd Leg., ch. 409, Sec. 20, eff. June

7, 1991; Acts 1997, 75th Leg., ch. 1423, Sec. 19.35, eff. Sept.

1, 1997.

Sec. 154.110. ISSUANCE OF PERMIT. (a) The comptroller shall

issue a permit to a distributor, wholesaler, bonded agent,

manufacturer, importer, or retailer if the comptroller:

(1) has received an application and fee, if required;

(2) believes that the applicant has complied with Section

154.101; and

(3) determines that issuing the permit will not jeopardize the

administration and enforcement of this chapter.

(b) The permit shall be issued for a designated place of

business, except as provided by Section 154.117.

(d) The permit must indicate the type of permit that it is and

authorize the sale of cigarettes in this state. The permit must

show that it is revocable and shall be forfeited or suspended if

the conditions of issuance, provisions of this chapter, or rules

of the comptroller are violated.

Acts 1981, 67th Leg., p. 1646, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 7, eff. March

1, 1986; Acts 1989, 71st Leg., ch. 240, Sec. 21, eff. Oct. 1,

1989; Acts 1991, 72nd Leg., ch. 409, Sec. 21, eff. June 7, 1991;

Acts 1997, 75th Leg., ch. 1423, Sec. 19.36, eff. Sept. 1, 1997;

Acts 2001, 77th Leg., ch. 1263, Sec. 49, eff. Oct. 1, 2001.

Sec. 154.111. PERMIT YEAR; FEES. (a) A permit required by this

chapter expires on the last day of February of each year, except

that the retailer's permit required by Section 154.101 expires on

the last day of May of each even-numbered year.

(b) An application for a permit required by this chapter must be

accompanied by a fee of:

(1) $300 for a bonded agent's permit;

(2) $300 for a distributor's permit;

(3) $200 for a wholesaler's permit;

(4) $15 for each permit for a vehicle if the applicant is also

applying for a permit as a bonded agent, distributor, or

wholesaler or has received a current permit from the comptroller

under Sections 154.101 and 154.110; and

(5) $180 for a retailer's permit.

Sept. 1, 1997.

(d) For a new or renewal permit required by Section 154.101, the

comptroller shall prorate the fee according to the number of

months remaining during the calendar year that the permit is to

be in effect.

(e) A person who does not obtain a permit each year in a timely

manner must pay a fee of $50 in addition to the application fee

for the permit.

(f) If at the date of issuance a permit will expire within three

months, the comptroller may collect the prorated permit fee or

the fee for the current year and, with the consent of the permit

holder, may collect the fee for the next permit year and issue a

permit or permits for both periods, as applicable.

(g) Expired.

Acts 1981, 67th Leg., p. 1647, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 8, eff. March

1, 1986; Acts 1989, 71st Leg., ch. 240, Sec. 22, eff. Oct. 1,

1989; Acts 1991, 72nd Leg., ch. 409, Sec. 21, eff. June 7, 1991;

Acts 1997, 75th Leg., ch. 671, Sec. 4.01, eff. Sept. 1, 1997;

Acts 1997, 75th Leg., ch. 1423, Sec. 19.37, eff. Sept. 1, 1997.

Sec. 154.1135. PAYMENT FOR PERMITS. (a) An applicant for a

permit required by Section 154.101 shall send the required fee

with the application.

(b) The payment must be in cash or by money order or check.

after the comptroller has received full payment on the check.

Added by Acts 1991, 72nd Leg., ch. 409, Sec. 22, eff. June 7,

1991. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.38, eff.

Sept. 1, 1997.

Sec. 154.114. FINAL SUSPENSION OR REVOCATION OF A PERMIT. (a)

The comptroller may suspend or revoke a person's permit if the

comptroller finds, after notice and hearing as provided by this

section, that the permit holder violated this chapter or an

administrative rule made under this chapter.

(b) If the comptroller intends to suspend or revoke a permit,

the comptroller shall provide the permit holder with written

notice that includes a statement:

(1) of the reason for the intended revocation or suspension;

(2) that the permit holder is entitled to a hearing by the

comptroller on the proposed suspension or revocation of the

permit; and

(3) of the date, time, and place of the hearing.

service or by mail to the permit holder's mailing address as it

appears on the comptroller's records. Service by mail is complete

when the notice is deposited with the U.S. Postal Service.

(d) The comptroller shall give the permit holder not less than

10 days' notice of a final hearing.

(e) A permit holder may appeal the decision of the comptroller

to a district court in Travis County not later than the 30th day

after the date the comptroller's decision becomes final.

(f) A person whose permit is suspended or revoked may not sell,

offer for sale, or distribute cigarettes from the place of

business to which the permit applied until a new permit is

granted or the suspension is removed.

(g) If the comptroller suspends or revokes a permit, the

comptroller shall provide written notice of the suspension or

revocation, within a reasonable time, to each distributor and

wholesaler permit holder in the state. A distributor or

wholesaler permit holder violates Section 154.1015(a) by selling

or distributing cigarettes to a person whose permit has been

suspended or revoked only after the distributor or wholesaler

permit holder receives written notice of the suspension or

revocation from the comptroller.

Acts 1981, 67th Leg., p. 1647, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 9, eff. March

1, 1986; Acts 1989, 71st Leg., ch. 240, Sec. 25, eff. Oct. 1,

1989; Acts 1991, 72nd Leg., ch. 409, Sec. 23, eff. June 7, 1991;

Acts 1995, 74th Leg., ch. 1000, Sec. 40, eff. Oct. 1, 1995; Acts

1997, 75th Leg., ch. 1423, Sec. 19.39, eff. Sept. 1, 1997; Acts

1999, 76th Leg., ch. 1467, Sec. 2.39, eff. Oct. 1, 1999.

Sec. 154.1141. SUMMARY SUSPENSION OF A PERMIT. (a) The

comptroller may suspend a person's permit without notice or a

hearing for the person's failure to comply with this chapter or a

rule adopted under this chapter if the person's continued

operation constitutes an immediate and substantial threat to the

collection of taxes imposed by this chapter and attributable to

the person's operation.

(b) If the comptroller summarily suspends a person's permit,

proceedings for a preliminary hearing before the comptroller or

the comptroller's representative must be initiated simultaneously

with the summary suspension. The preliminary hearing shall be set

for a date not later than 10 days after the date of the summary

suspension, unless the parties agree to a later date.

cause why the permit should not remain suspended pending a final

hearing on suspension or revocation.

(d) Chapter 2001, Government Code, does not apply to a summary

suspension under this section.

(e) To initiate a proceeding to suspend summarily a person's

permit, the comptroller shall serve notice on the permit holder

informing the permit holder of the right to a preliminary hearing

before the comptroller or the comptroller's representative and of

the time and place of the preliminary hearing. The notice must be

personally served on the permit holder or an officer, employee,

or agent of the permit holder or sent by certified or registered

mail, return receipt requested, to the permit holder's mailing

address as it appears in the comptroller's records. The notice

must state the alleged violations that constitute the grounds for

summary suspension. The suspension is effective at the time the

notice is served. If the notice is served in person, the permit

holder shall immediately surrender the permit to the comptroller

or the comptroller's representative. If notice is served by mail,

the permit holder shall immediately return the permit to the

comptroller.

(f) Section 154.114, governing hearings for final suspension or

revocation of a permit under this chapter, governs a final

administrative hearing under this section.

Added by Acts 1995, 74th Leg., ch. 1000, Sec. 41, eff. Oct. 1,

1995. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.40, eff.

Sept. 1, 1997.

Sec. 154.1142. DISCIPLINARY ACTION FOR CERTAIN VIOLATIONS. (a)

A retailer is subject to disciplinary action as provided by this

section if:

(1) an agent or employee of the retailer commits an offense

under Subchapter H, Chapter 161, Health and Safety Code; and

(2) the retailer, with criminal negligence, failed to prevent

the offense through adequate supervision and training of the

agent or employee.

(b) If the comptroller finds, after notice and an opportunity

for a hearing as provided by this subchapter, that a permit

holder has violated Subchapter H or K, Chapter 161, Health and

Safety Code, at a place of business for which a permit is issued,

the comptroller may suspend the permit for that place of business

or administratively assess a fine as follows:

(1) if the permit holder has not been found to have violated

Subchapter H or K, Chapter 161, Health and Safety Code, at that

place of business during the preceding 12 months, the comptroller

may require the permit holder to pay a fine in an amount not to

exceed $500;

(2) if the permit holder has been found to have violated

Subchapter H or K, Chapter 161, Health and Safety Code, at that

place of business once during the preceding 12 months, the

comptroller may require the permit holder to pay a fine in an

amount not to exceed $750; and

(3) if the permit holder has been found to have violated

Subchapter H or K, Chapter 161, Health and Safety Code, at that

place of business at least twice during the preceding 12 months,

the comptroller may require the permit holder to pay a fine in an

amount not to exceed $1,000 or suspend the permit for that place

of business for not more than three days.

has been found to have violated Section 161.082(b), Health and

Safety Code, on four or more previous and separate occasions at

the same place of business during the preceding 12 months, the

comptroller shall revoke the permit.

(d) A retailer whose permit has been revoked under this section

may not apply for a retailer's permit for the same place of

business before the expiration of six months after the effective

date of the revocation.

Added by Acts 1997, 75th Leg., ch. 671, Sec. 4.03, eff. Sept. 1,

1997. Amended by Acts 1999, 76th Leg., ch. 1157, Sec. 1, eff.

Sept. 1, 1999.

Sec. 154.1143. ACTIONS OF EMPLOYEE. (a) For purposes of

Subchapter H, Chapter 161, Health and Safety Code, and the

provisions of this code relating to the sale or delivery of

cigarettes or tobacco products to a minor, the comptroller may

suspend a permit but may not revoke the permit under Section

154.1142(c) if the comptroller finds that:

(1) the employer has not violated Section 161.082(b), Health and

Safety Code, more than seven times at the place of business for

which the permit is issued in the 24-month period preceding the

violation in question;

(2) the employer requires its employees to attend a

comptroller-approved seller training program;

(3) the employee has actually attended a comptroller-approved

seller training program; and

(4) the employer has not directly or indirectly encouraged the

employee to violate the law.

(b) The comptroller shall adopt rules or policies establishing

the minimum requirements for approved seller training programs.

On application, the comptroller shall approve seller training

programs meeting the requirements that are sponsored privately or

by public community colleges. The comptroller may charge an

application fee in an amount necessary to defray the expense of

processing the application.

training program sponsored by a permit holder for the purpose of

training its employees without regard to whether the employees

are located at the same place of business. This subsection

applies only to a permit holder who employs at least 100 persons

at any one time during the permit year who sell cigarettes or

tobacco products.

Added by Acts 1997, 75th Leg., ch. 671, Sec. 4.04, eff. Sept. 1,

1997.

Sec. 154.1145. HEARINGS. Unless otherwise provided by this

chapter, the comptroller shall conduct all hearings required by

this chapter in accordance with Chapter 2001, Government Code.

The comptroller may designate one or more representatives to

conduct the hearings and may prescribe the rules of procedure

governing the hearings.

Added by Acts 1991, 72nd Leg., ch. 409, Sec. 24, eff. June 7,

1991. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(49),

eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 1000, Sec. 42, eff.

Oct. 1, 1995; Acts 1997, 75th Leg., ch. 1423, Sec. 19.41, eff.

Sept. 1, 1997.

Sec. 154.116. COMPTROLLER MAY REFUSE TO SELL STAMPS. The

comptroller may refuse to sell stamps to a person who has not

obtained a distributor's permit or to a distributor who does not

have a valid permit.

Acts 1981, 67th Leg., p. 1648, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.42, eff.

Sept. 1, 1997.

Sec. 154.117. DISPLAY OF PERMIT. (a) Each permit holder shall

keep the permit on public display at the place of business for

which the permit was issued.

(b) Each permit holder who has a permit assigned to a vehicle

shall post the permit in a conspicuous place on the vehicle.

place a retailer's permit on the machine.

Acts 1981, 67th Leg., p. 1648, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1991, 72nd Leg., ch. 409, Sec. 25, eff.

June 7, 1991.

Sec. 154.121. REVENUE. (a) Except as provided by Subsection

(b), revenue from the sale of permits to distributors,

wholesalers, and bonded agents is allocated in the same manner as

other revenue allocated by Subchapter J.

(b) Revenue from the sale of retailer's permits shall be

deposited to the general revenue fund and may be appropriated

only as provided by this section. The money may be appropriated

first to the comptroller for administration of licensing of

retailers under this chapter or Chapter 155.

revenue remains from the sale of retailer's permits, the

remaining money may be appropriated to the comptroller for

administration and enforcement of Subchapters H, K, and N,

Chapter 161, Health and Safety Code, and to the Texas Department

of Health, for the administration and enforcement of Section

161.253, Health and Safety Code.

(d) If, after any appropriation is made under Subsections (b)

and (c), revenue remains from the sale of retailer's permits, the

remaining money may be appropriated to the Texas Department of

Health to administer the commissioner of public health's

responsibilities under Section 161.301, Health and Safety Code.

(e) If, after any appropriation is made under Subsections (b),

(c), and (d), revenue remains from the sale of retailer's

permits, the remaining money may be appropriated to the

appropriate entity to administer that entity's responsibilities

under Section 161.302, Health and Safety Code.

Acts 1981, 67th Leg., p. 1648, ch. 389, Sec. 1, eff. Jan. 1,

1982. Amended by Acts 1985, 69th Leg., ch. 58, Sec. 12, eff.

March 1, 1986; Acts 1991, 72nd Leg., ch. 409, Sec. 25, eff. June

7, 1991; Acts 1997, 75th Leg., ch. 671, Sec. 4.02, eff. Sept. 1,

1997.

SUBCHAPTER E. INTERSTATE BUSINESS

Sec. 154.152. INTERSTATE STOCK. (a) A distributor shall set

aside unstamped cigarette packages for interstate sale and for

which no tax is due under federal law in a separate part of the

building from the stamped packages. If the unstamped packages for

interstate sale or for which no tax is due under federal law are

not stored separately, the cigarettes are subject to the same

requirements as cigarettes possessed for the purpose of a first

sale in this state.

(b) A distributor who possesses unstamped cigarette packages for

interstate sale must possess a number of unused stamps from the

appropriate state sufficient to stamp the distributor's inventory

of unstamped interstate cigarettes, except for cigarette packages

for which no tax is due under federal law. Any unstamped packages

of cigarettes that exceed the number of out-of-state stamps on

hand shall be presumed to be held for sale in this state, except

for cigarette packages for which no tax is due under federal law.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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